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2000 Was an Interesting Year: How About 2001? (Mar 2001)
March 1, 2001 |Estimated reading time: 3 minutes
The year 2000 will go down in history as one of the strongest growth years for the electronics industry. How is 2001 looking? 2000 Was an Interesting Year: How About 2001?
(The following was written by Walt Custer for the California Circuits Association February 2001 newsletter. Thanks to CCA for their permission to republish the article on www.pcb007.com.)
The year 2000 will go down in history as one of the strongest growth years for the electronics industry. Per the table below, rigid PCB orders rose 22% and shipments 18% versus 1999.
Category Orders Shipments 1/12 3/12 12/12 1/12 3/12 12/12 Rigid PCB $ 0.85 1.03 1.22 1.16 1.20 1.18 Flex Circuits $ 1.10 1.05 1.22 0.89 1.01 1.27 Rigid Laminate & Prepreg SF 1.19 1.26 1.23 1.23 1.23 1.16 Semiconductors $ N/A N/A N/A 1.22 1.31 1.35 Electronic Components $ 1.08 1.10 1.18 1.25 1.23 1.25 Computer & Office Equip $ 1.20 1.24 1.22 1.33 1.24 1.22 Communications Equip $ 0.91 0.96 1.17 1.21 1.21 1.22 Measurement & Control Equip $ 1.18 1.22 1.20 1.13 1.16 1.17 Search & Navigation Equip $ 0.80 1.00 1.01 0.99 0.99 0.98 Household Audio & Visual Eq $ N/A N/A N/A 1.15 1.15 1.10 Total Electronic Equipment $ 1.05 1.11 1.18 1.22 1.19 1.18 Industrial Production $ Index N/A N/A N/A 1.03 1.04 1.06
Notes:
- Geographical Scope: Electronic equipment & Industrial Production data - USA, PCB & Laminate data - USA & Canada, Semiconductor data - North America.
- Total Electronic Equipment = sum of computer & office, communications, measurement & control and search & navigation (primarily military)
- Sources: IPC, SIA (Semiconductor Industry Assoc), U.S. Dept of Commerce
- 1/12= December 2000/December 1999 growth rate, 3/12 = (Oct+Nov+Dec 2000)/(Oct+Nov+Dec 1999), 12/12= total 2000/total 1999. Example: Rigid PCB orders grew 22% annually, 3% for 4Q'00 vs. 4Q'99 and -15% for December 2000 vs. December 1999
One driver for this strong PCB growth was robust electronic equipment orders - up 18% in 2000 compared to 1999. Unfortunately, the second PCB growth driver for 2000 was inventory buildups and double/extended ordering by the CEMs and OEMs. Towards year-end, electronic equipment order growth slowed (from +22% on an annual basis to only +5% for December 2000/December 1999). Less robust cell phone demand and flat personal computer sales were key factors. At the same time, Internet infrastructure companies, i.e., Cisco and telecoms (such as Lucent), felt the pinch. Inventories built at the OEM level are being aggressively reduced and component orders have felt the effects. An industry-wide move to reduce inventories by CEMs/OEMs is like "turning off the order spigot" for their component suppliers. Hence the dramatic slowing in December PCB orders.
Year 2000 is now history. The first quarter of 2001 is exhibiting a noticeable slowdown and my guess is that the second quarter won't be that much better. When will the turnaround occur? Electronic equipment orders are key. For much of 2000, communications equipment was a major PCB driver, but by December, growth had stalled with orders down 9% versus December 1999. My advice is to listen carefully to the "Guidance" statements of the high-volume PCB consumers - Cisco, Nortel, Lucent, etc. In their public statements, the CEOs typically give some forward insight into business conditions.
Recently, Compaq and Dell warned of a difficult first half of 2000. Cisco and others have provided similar warnings. Most companies are tightening their belts, reducing inventories to the minimum and restructuring themselves for leaner times. The component shortages of 2000 are now largely behind us and OEMs and CEMs are shedding excess stock rather than ordering an extra quantity like they did in 2000 "just in case."
My "business outlook" prediction is for a slow 1H'01 with gradual recovery in the second half. If you want to monitor the situation, watch the "Business Indicators" posted on my website www.custerconsulting.com. Track the rigid PCB book/bill ratio (Chart 1) and the growth of PCBs vs. electronic equipment (Chart 2). And if you want to follow our fast-moving industry more closely, ask for a free 30-day trial of my daily news service. E-mail me at wcuster@mindspring.com.
IPC Printed Circuits Expo 2001
See you in Anaheim, CA April 3-5, 2001. Visit Custer Consulting Group's booth #656. Also listen to my annual "Industry Outlook" presentation at the free IPC Expo forum "Industry Market Trends and Statistics" held from 9:30 am to 11:00 am on Thursday, April 5th.
Walt Custer Custer Consulting Group Phone: 707 785-1777 FAX: 707 785-1988http://www.custerconsulting.com/
E-mail: America Online waltcuster@aol.com Internet wcuster@mindspring.com